The year-end search for green shoots is in full swing. The Associated Press writes, “The economy is ending 2011 on a roll. The job market is healthier. Americans are spending lustily on holiday gifts. A long-awaited turnaround for the housing industry appears to be under way. Gasoline is less expensive. Factories are busier. Stocks are higher.”
The reality is more somber. Today the government revised third-quarter growth of gross domestic product down from 2 percent to 1.8 percent. If we see a spurt in the last quarter, it’s likely to be short-lived. Such anemic growth makes it impossible to dig out of the demand hole left by the Great Recession, and especially the jobs crisis.
The Economic Policy Institute offers 11 charts showing the misery that remains in the labor market. More visual evidence of the wide economic wreckage comes from the Washington Post. Among the more arresting graphics shows how male employment has been falling since the 1970s.
To be sure, we’re on a dual track. Most of the “haves” have more than ever. Corporate profits remain at records, although these companies are in no hurry to spend in America, particularly to create jobs. Companies that entered the downturn with strong fundamentals are doing better than ever. Americans that make most of their money from investments, rather than wages, are riding high (except for seniors in safe but low-return products). Seattle is a “wealth island” performing far better than most American metros.
This reality operates in tandem with millions who are jobless, financially ruined, underwater on their mortgages, facing foreclosure or suffering a higher workload for stagnant or falling wages. The big challenges remain. The old housing boom is not coming back. A broken trade paradigm is leaving more losers than winners. Strong niche manufacturing can’t make up for some 40,000 factories closed and 2.8 million factory jobs lost over 10 years. The economy remains more focused on risky financial plays than creating productive enterprises. Consumer debt remains very high. All those “toxic assets” are still ticking on the Fed’s books. Growth is too slow. And overseas, both the eurozone crisis and China’s potential hard landing could send us back into recession.
Meanwhile, the political paralysis that so damaged recovery prospects in 2011 is nothing like we will see in the election year. Continued government cutbacks and the irrational, destructive focus on quick deficit reduction ensure trouble.
Time to mow the latest Astroturf outbreak.
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